Capital increases are attractive to investors once again

The shares of companies on the Stock Exchange, which announced capital increases since the beginning of the year have been in high demand among investors after they had steered clear of capital increases in the past two years, and were in a hurry to sell their shares in order not to be involved in such a move.

For instance, shares of petroleum equipment manufacturer Uztel Ploiesti (UZT), which is seeking to raise 4.7 million euros from its shareholders, climbed on the date when the company announced its intention to boost its capital, by 55% in just a few trading sessions.

The rises are reminiscent of the situation back in 2006-2007, when announcements of capital increases on the Stock Exchange brought about significant increases for those companies’ shares.

“A retail investor perceives capital increases as an opportunity to secure a stake at a significant discount from the market price, not as a right to keep the stake in the company. For instance, their reasoning is that they now have 20,000 shares and can have 60,000 shares purchased at a lower cost, which will bring them an additional profit,” says Adrian Lupsan, deputy general manager at brokerage firm Intercapital Invest.